Kirby Corporation (NYSE:KEX) Q2 2019 Earnings Conference Call - Final Transcript

Jul 25, 2019 • 08:30 am ET

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Kirby Corporation (NYSE:KEX) Q2 2019 Earnings Conference Call - Final Transcript

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Q & A
Executive
David W. Grzebinski

the end of the year, maybe a third in the first quarter of next year or the first half of next year, plus there's a couple of natural gas pipelines coming on. So if you assume a flat oil price, which is a dangerous assumption, I understand, all things being equal, Permian profitability should get better because the takeaway infrastructure is going to be there and that's going to reduce their cost profile and improve their netbacks. So given where we are and world oil situation, I think it should be better, if not in '20, certainly, somewhere in and around there. So we're pretty happy with the portfolio as it is, is the short answer.

Analyst
Ben Nolan

Okay. And then real quick, just as my follow-up. As it relates to the weather-related things, both in the first quarter and now in the second quarter, and even a little bit in the third quarter, just curious, for all of your chemical customers and everybody else, is there some degree of pent-up inventory or something else that needs to move that as things normalize, you could actually see a little bit of a spike in activity or something like that or is this simply finding maybe an alternative, more expensive means of transportation and there shouldn't be any outsized level of sort of short-term recovery activity or something like that.

Executive
David W. Grzebinski

There may be a little. There is some pent-up demand, but we're working with our customers to meet their plant feedstock needs and their plant takeaway needs. That is -- the weather has helped the utilization in the industry, probably 2% to 3%. So post the pent-up demand work off, you could see utilization dip a little. But I will say this, the industry is basically fully utilized. There is almost no spare capacity out there. So we do need a little relief on that. It's been very, very tight. But look, this weather will pass. We're hearing mid, maybe even late August, when the high water situation will come down and will get back to more normal weather. This has just been an abnormal year. The good news in my mind is that the demand-side is solid. Our customers have invested billions in new plants and new facilities and expansions. The feedstock situation that they have is fuel sustainable. They're getting low-price natural gas that helps run their plants and converts into some of the petrochemicals. Clearly, the light crude coming out of the shale is also a good feedstock source. So when you look at the demand-side of our barge picture, it's pretty robust. We've got good feedstock position for our customers, they've been investing a lot and it should be good for a while.

Analyst
Ben Nolan

Great, I appreciate. Thanks Dave.

Executive
David W. Grzebinski

Thanks, Ben.

Operator
Operator

Thank you. And our next question comes from Greg Lewis with BTIG. Your line is now open.

Executive
Gregory Lewis

Yes, thank you. Good morning everybody.

Executive
David W. Grzebinski

Hi. Good morning Greg.

Executive
Gregory Lewis

David, I mean, you touched on it a little bit in terms